Centre plans phased development of CEZs

November 24, 2016 — INDOLINK Consulting (es)

Source: Business Standard, Nov 22, 2016

New Delhi: The Narendra Modi-led government has begun the mammoth task of port-led development through coastal economic zones (CEZs) across all the nine maritime states by advancing efforts to develop one new port each on the east and west coast. According to experts, the government does not want to “spread too thin” and, therefore, is focusing on the east and the west coast to begin with.

The government is essentially phasing these CEZs depending on where the ecosystem is right, where there’s availability of large contiguous land parcels, access to urbanisation and supporting infrastructure, and where prime manufacturing locations are in place. The learning from these will be replicated across other CEZs.

“You need one large port and small ports nearby and also industrial clusters, which will support the port-led development,” said an expert who did not wish to be named.

In July this year, under its ambitious Sagarmala programme, the government announced building 14 CEZs, to be aligned to relevant ports in the maritime states and will house Coastal Economic Units for setting up manufacturing facilities. The CEZs are spatial-economic regions, which could extend along 300-500 km of coastline and 200-300 km inland from the coastline.

Each CEZ will be an agglomeration of coastal districts within a state.

The Sagarmala programme has four essential features – port modernisation, port connectivity, port-led industrialisation and coastal community development. CEZs fall under the third category, said a shipping ministry official.

He said each port would be developed into a specialised zone – some zones would have a specialised container terminal, some may focus on handling cargo etc. But, experts feel that CEZs or port-led development cannot work in silos. Even if one port specialises in a particular logistic activity, another port should also be able to handle it and vice-versa.

Even though the CEZs have been conceptualised keeping the industrial sector in mind, their impact on tourism cannot be neglected as it would be a vital by-product of the port-led development.

Ports handle 90 per cent of the country’s EXIM cargo by volume and 70 per cent through value.

Gujarat alone caters to 25-30 per cent of the cargo traffic. Therefore, connecting the coastal areas to ports through port-led development was planned as proximity to the port brings down the logistics cost of a company substantially, an official told Business Standard.

According to the coastal economic zone perspective plan of the shipping ministry, the states are expected to come forward to work with the Centre to develop these CEZs and the corresponding industrial clusters. All the 14 CEZs come under the influence area of major or non-major ports. The influence area is considered flexible and districts covered under the CEZ could change in the future depending on the industry growth.The 14 proposed CEZs are Kachchh, Suryapur and Saurashtra in Gujarat; North and South Konkan in Maharashtra; Dakshin Kanara in Karnataka; Malabar in Kerala; Mannar, VCIC South and Poompuhar in Tamil Nadu; VCIC Central and North in Andhra Pradesh; Kalinga in Odisha; and Gaud in West Bengal.

These are expected to cater to the food processing, steel, cement, leather processing, petrochemicals, ship building, electronics and automotive industries.

The government’s perspective plan also states: “If India wants to establish a strong position in the global export market, it should overcome the key challenges – high lead time and sub-scale operations.” Lead time is the amount of time that lapses between when a process starts and its completion.